Hormel Foods facing AgFeed lawsuit

Many Maryland residents and businesses have shown interest in the outcome of a lawsuit against Hormel Foods. The suit alleges that Hormel Foods did not disclose issues about a company responsible for raising the livestock used in their products.

The issues that lead to the suit dated back to 2010 when AgFeed Industries was in negotiations to buy M2P2, a pork supplier. Officials from Hormel Foods reportedly gave AgFeed Industries assurance that the company was in compliance with contracts. The suit alleges, however, that Hormel was aware of problems with M2P2 and filed a request for arbitration over a dispute about the reimbursement amount from Hormel. AgFeed Industries shareholders have stated that they would not have gone through with the purchase had they been aware of the M2P2 problems.

The acquisition had a severe financial effect on AgFeed. The company filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Wilmington, Delaware, in 2013. AgFeed sold its operations in the U.S. and in China for approximately $130 million. The company, which had employed about 200 workers, also had to cope with accusations of fake revenue reporting, resulting in an $18 million settlement to the U.S. Securities and Exchange Commission.

As shown in this case, any business dispute can have long-lasting consequences for companies and their owners. When a company is in danger of bankruptcy or believes that partners were not honest in disclosing pertinent information, getting assistance from a lawyer may help. Depending on the situation, an lawyer may find discrepancies in contracts or negotiations and advocate on their client’s behalf.

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